UPDATE 2-China's Ping An sees slowdown after bumper Q2

* Q2 net profit 5.06 bln yuan vs 3.35 bln market view

* H1 investment income up 44 pct to 12.6 bln yuan

* H1 banking profits double to 1.1 bln yuan

* Warns of slowdown in H2 as stocks sputter (Adds details of results, quotes from statement)

By Kelvin Soh

HONG KONG, Aug 24 (Reuters) - Ping An Insurance (2318.HK) warned it faced a slowdown as China tries to cool its racing economy, after the world's second-largest insurer beat forecasts with a 58 percent rise in second-quarter net profit.

Profits from Ping An's (601318.SS) banking unit doubled to 1.1 billion yuan from 577 million yuan a year earlier, following its purchase of a 30 percent stake in Shenzhen Development Bank (000001.SZ) and amid a push to promote its own bank.

"My estimates are already on the high side, and it beat that too," said Ivan Li, an analyst at Kim Eng Securities in Hong Kong. "If Ping An's banking unit can do so well in the first half, it's likely to repeat the same thing again for the rest of the year."

Ping An, which is moving to transform itself into a bancassurer by combining its banking unit with a mid-sized Chinese bank, is aiming to tap growing demand for financial products in the mainland, where penetration levels of insurance are amongst the lowest in the world.

It made an April-June net profit of 5.06 billion yuan ($744 million), up from a 3.2 billion yuan profit a year ago and beating expectations for a 3.35 billion yuan profit, according to a Reuters survey of five analysts.

Ping An's investment income in the first six months of 2010 rose 44 percent to 12.6 billion yuan, but it had to take a 2.2 billion yuan writedown amid a 22 percent slump in the Shanghai stock market.

The stock market fall also caused its investment yield to slip 1.1 percentage points to 3.7 percent from the same period a year ago. It warned of tougher times ahead as Beijing takes steps to prevent the economy from overheating.

"We face challenges caused by the fade-out of stimulus economic policies and economic structural adjustments," Ping An's Chairman Ma Mingzhe said in a statement posted on the Hong Kong stock exchange.

"Together with the volatile stock market, all these will put pressure on our second-half results."

The insurer, which has a network of over 400,000 insurance agents, has previously said it wanted to become a financial conglomerate like HSBC (HSBA.L)(0005.HK) and Citigroup (C.N), using the bancassurance model to sell its insurance and its banks to sell its insurance products.

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For StarMine comparative table: r.reuters.com/bev56n

For a graphic on how China's insurance sector compares:

r.reuters.com/paw26n

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Ping An put 62.7 percent of its investible assets in bonds, up from 59.6 percent a year ago on expectations that the stock market will be volatile in 2010. [ID:nTOE63I07S]

Bonds are often seen as a safer investment option as they typically come with a guaranteed payout.

Total premiums grew 26 percent to 93.1 billion yuan.

Premiums in China grew 14.6 percent in 2009, adjusted for inflation, compared with a 1.1 percent decline globally, according to Swiss Re.

Shares of Ping An have been suspended since late June as it integrates its banking unit with Shenzhen Development Bank.

Hong Kong shares of China Life (2628.HK)(601628.SS), which is reporting results on Wednesday, are down more than 13 percent so far this year, more than the 4 percent decline of the benchmark Hang Seng Index, and its Shanghai shares are down 24 percent, greater than the 19 percent decline of the Shanghai Composite Index .SSEC. (Reporting by Kelvin Soh, Editing by Muralikumar Anantharaman and XX))